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Sunday, July 17, 2011

“Best” Practice

One of the most inaccurate phrases we often run across is “best practice”. Let’s be clear, I am not opposed to best practices - I want to employ them.

However, most often it appears in comments or questions such as “Let’s hire a consultant so we can incorporate best practices” or “what is the best practice in our industry?”

In these examples, my contention would be that “best practice” is really a euphemism for “common practice” or “what a lot of other folks are doing”. For example, one might hear that “best practice for grocery stores is to scan items after the customer has finished shopping and then collect payment”.

It seems like the fundamental concern in the context of the statements above are “let’s do what most others do so we don’t stick out like a sore thumb”.

Sometimes, the phrase can be used to beguile or mislead. I remember being in a conference room where a lean / six-sigma event had been recently held. Still hanging on the walls were the large sheets of paper with terms like ‘current state’, ‘future state’, etc. On one of those sheets of paper, …under a forecasting heading…for the future state…was the statement “best practice in the industry is multiple regression analysis”.

Now, I do not pretend to be an expert in whatever area was holding this event, but as an avid student of statistics I do know that there are a lot of different statistical tools you can use to analyze past data and forecast future data. Multiple regression is one out of thousands of possibilities, just as a hammer is one out of thousands of possible tools. However, a hammer is only the ‘best practice’ tool when you need to pound in a nail.

So, I imagined someone getting that statement onto that piece of paper, and thinking it must have gotten there through the following train of thought: “if I use the term best practice it will convey some authority and imply that lots of others are doing this and therefore we need to in order to keep up, and if nobody in this room knows better it will shield my little part of the process from needing to change, since this is what we are doing now.”

Best practice can be a useful term in organizational warfare.

As most athletes will tell you, only one can be the best. There is only one World Cup, Stanley Cup, or Olympic Gold champion. Therefore, to truly have a best practice is to have something that nobody else does. This means being willing to do things differently than others. It means having the courage to say – “we are different”.

This implies that we may have a competitive advantage in something, assuming it is related to our business (i.e. if a tech firm has a best practice in janitorial services it may not help much). It is going to arise from the knowledge, talent and experience of your team, not from a consultant or others in the industry.

It can be difficult to develop and maintain best practices, since it does involve a determination to go against the crowd. We need to be a contrarian if we are going to excel.

So applying this philosophy to my Treasury and Finance area, we start with industry standards and norms with respect to our operations (most of which are the “best practices” that are touted.). The work does not stop there. It is a foundation, but in order to truly be best at something we then need to decide specifically what that something is, given our group and the organization it works within, and then it is up to us to figure out exactly how to do that.

I would love to hear your thoughts about this view of best practices or your stories on this topic if you have them.

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